The Lempert Report LIVE

H-E-B's Secret to Success, The Rise of Counter Service, and Balancing Taste with Health in the Food Industry

January 23, 2024 Phil Lempert Episode 111
The Lempert Report LIVE
H-E-B's Secret to Success, The Rise of Counter Service, and Balancing Taste with Health in the Food Industry
Show Notes Transcript Chapter Markers

Discover the secrets behind H-E-B's reign at the top of the DunnHumby Retailer Preference Index for an incredible eight years, and hear our surprise when we reveal Amazon taking the silver. Join me and special guest Sally as we dissect what sets these retailers apart, focusing on the potent mix of exceptional customer service and employee fulfillment that makes H-E-B a standout. From in-store fresh tortillas to a workforce brimming with pride, we break down the essential ingredients to their recipe for success. We also shed light on the unique struggles of independent grocers, tackling issues like labor shortages and the challenges in offering big-brand products, all while underscoring the undeniable impact of a dedicated team in cultivating a welcoming shopping experience.

Then, buckle up as we take you on a culinary detour to Seattle, where the counter service craze is sweeping through upscale eateries. With insights from Beth and Clement of the Seattle Times, we weigh the pros and cons of this efficiency-driven trend. Could this be the future of fine dining? We ponder the balance between savings and sacrificing the personal touch. We also dive into the staggering statistics of smartphone addiction and its effects on our social interactions. To cap it off, we address the food industry's pivotal role in harmonizing the irresistible taste of dishes with the health and sustainability demands of today, drawing inspiration from Burt Lahrs' Challenge. 

Phil:

Welcome to the Lempor t Report IVE. On today's broadcast: Done on these lists of the top grocers, independent retailers, look into their crystal ball's and there's some interesting points there. What started in the food courts at malls now expands to restaurants Food N ot Phones, Siggi's Challenge and, on the bullseye, the marketing of foods in the age of Ozempic, let's get started. So, Sally, when I look at Dunnhumby's list and I'm curious about this and I like the list and I agree they name HEB as the top US grocery retailer and they've got this is the eighth year that they've done it the retailer preference index, and what they do is they look at five categories price promotion, the rewards, quality, digital operations and then speed and convenience as one category. They look at the top 65 largest retailers that sell food and HEB was number one. Amazon was number two, which was very surprising to me, costco number three and then Market Basket, Sam's Club, wegmans, aldi, shoprite, walmart, neighborhood Market and then Walmart itself. So what I'm curious about and we see these things from consumer reports every year and USA Today and everybody else does all these lists how retailers can really learn from these findings. I think is so important and what I object to and I love Dunnhumby. I think they're a brilliant company, but what I object to is the fact that they're really not giving other retailers the tools that they need to get into the top 10. You know, like, hey, be nicer to your customers, have record, whatever. So what do you think of this top 10? And you've spent time in Texas, you've been to H-E-Bs. I know you're a Kroger shopper. Kroger, by the way, has not done really well in this survey for a number of years, but what do you think?

Sally:

Yes, like you, I was surprised to see Amazon as number two, but I was not surprised to see H-E-B on the top of the list. You know they receive a lot of accolades for the way that they operate their business. We love H-E-B. My husband is from Waco, Texas, and we always go to the H-E-B when we're in Waco. You know people really like H-E-B for one reason because of the employees the employees that many of which have worked there for over 30 years. They seem to do really great at making their employees happy and excited about their job and they must offer some great benefits so that they can keep really good, dedicated employees, and I think that that's something that's coming up a lot right now. With self-checkout being an issue for some people, with people moving away, some people moving away from delivery and wanting that human experience. They want to be able to connect with the people in stores. I also think one of the reasons that H-E-B is doing so well is one for value, but also they have a lot of unique offerings and food products. You know, one of the things we love about going to H-E-B is that they make their own tortillas in the store and it is a very exciting thing to go to a big retailer like that and find homemade tortillas.

Phil:

And also what I love and I'm so happy that you brought up the tortillas, like what I love about it is it's not where it's in the back room, it's you know, the H-E-Bs that I've been in. It's usually near the deli, right in front, so it's like in the middle of it. You can't miss it. You know there's somebody there, you know, just doing it. I agree, I applaud H-E-B. The other thing, and I think that these surveys get too complicated so Market Basket, Win Co and Aldi took the top three spots as it relates to price promotions and rewards, and Wegmans maintains its top position in the quality category and it's held every year Of the index since its inception. So I think we just need to make it simpler. But we applaud HEB. I'm totally in tune with you on that. Now, Whole foods magazine, which has nothing to do with whole foods. The supermarket chain um Did a column which I think is interesting, where they surveyed independent retailers about what's going on now and the future. What I don't like about the article is, first of all, they don't need the retailers. So they say, oh, southeast retailer, and the southeast retailer says what's most concerning is not being fully stashed. Um, we benefited from social media influencers pushing items they wanted to restore. In reading through all these reports, all these retailers and there's got to be 10, 12 different retailer comments in most of them were small sports. Most of them have a health food bent. So there's a lot of that vitamins and talking a lot about supplements, things like that. But you stand out. For me is that number one they are having a labor shortage, no question about it. Number two is that what they're finding again, independent retailers in all our stores that a lot of the major brands are not Satisfying their needs. They can't get product on, if you would on. There's a couple of them that talked about employees and there's one that makes me laugh. This is a southern retailer. Wherever that might be, labor is always our number one challenge. There's always attrition. Okay, we know that we had some toxic people that created. What enormous stress. They shut down the store during cove it for a month. Hiring to replace the crew took a while, but we have good, nice people now and good people attract more nice people. To your point about each eb, you know, let's focus on the employees, let's forget about A off. I mean, some of these retailers are talking about a off thought. It comes down to the people, and you know Whole Foods magazine. Again, I think your concept here was a good one, but name the retailers. Give us more specifics on what people can really learn from these retailers.

Sally:

I agree, I would love to know who some of these retailers are. I would love to visit their stores and see what's going on, what's working, what's not working. But, yes, the main theme I heard over and over throughout reading about these different small retailers in different regions of the country was we heard about staffing and not being able to get people that want to work, that are excited about working. We heard about focusing on being more efficient. We had also heard about social media influence. Something interesting that I took away from that was the idea that they're talking about using those social media influencers but that it doesn't always mean that we're posting a bunch of pictures of food. We're actually doing better posting pictures of human beings. Here we are. The 2024 theme is human connection. We've been talking about this a lot. I love last week, Phil, the interview that you did with Lisa W. Miller. Lisa W. Miller talked about investing in your employees and how important that is right now. I couldn't agree more that we want people to go into our stores and have that great human experience right now. We're not long past being shut down from the pandemic, but we're out, that we're getting out there and we're more into meeting up with people and connecting and having conversations. It is interesting to see that these small retailers are talking about the same thing about having employees that are excited to work there and really investing in that.

Phil:

I agree with you. Check out the story in Whole Foods magazine. Again, it's not related to Whole Foods, the supermarket chain. And again, recommendation of Whole Foods magazine Tell us who these retailers are. I can't believe that when I read some of these comments, that it's because they want confidentiality. Because they're not. Let's move on. In Seattle there's an article in Seattle Times that Beth Ann Clement wrote she's the Seattle Times food writer that talks about how some of the new restaurants in Seattle, the upscale, quality, chef-driven restaurants, are going to counter service when basically what you do is you go up to the counter, you order at the counter, they might give you a number and then they bring you your food. It reminds me of when food courts first started in shopping malls. She really talks about the cost savings that are there. But probably my takeaway, which I really didn't think about, because I think about McDonald's or I think about Starbucks or I think, in terms of counter service like that, that what these chefs are doing is they're really training their people at the counter to be able to explain about the food, to talk about the food. That this could be a new trend that really connects the the people who've got a restaurant, more with the kitchen than having to go through. You know you're a waiter To to communicate. What do you think of this idea and do you think that it has legs and it's going to expand?

Sally:

I have mixed feelings about this, phil. You know it's it the the idea behind it that you know some of these restaurants ended up going this way because during the shutdown, they had to just learn how to make great takeout food. What can they make that will travel well from restaurant to home and will be great. So I can see where it, how they've ended up here. And you know, as we've been talking so much about, about staffing issues, you know, I think so these restaurants are seeing, and this is an opportunity hey, let's focus on making really great food, making our food really. That's what people are coming for and you know we can. We don't have to spend as much money on the staffing. Now, one of the issues I take with it and I'm I just got back from Baja in Mexico, and this is very, very common place, where I was almost every restaurant Was order at the counter, take a number to your table, even in very nice restaurants, and then you sit and wait and I find it to be a little bit frustrating because I Don't. I feel like I'm forgotten, I feel like, oh no, they're not gonna find me. I feel like it takes longer for me to get my food or to get a refill on my drink, or you know another cocktail. If I'm ready to have another cocktail, I've got to go to the counter in order again, rather than order from my server. So you know, this to me is a slippery slope, just like self-checkout is. You know, peace. Those people that don't want to do self-checkout, they want a person at the grocery store helping them through the process of checking out their groceries, bagging them. You know all of that. They may feel the same way about going to a restaurant where they don't have somebody actually taking care of them.

Phil:

I think you bring up some really good points and also in this article she talks about the fact that I think it's an average of a nice restaurant, not a really upscale restaurant in Seattle on. For two people. Now, dinner for two and wine cost you 150 bucks, so for $150. Yeah, I want to wait her. I'm somebody to agree and and I love your example of self-checkout. It's. It's the same issue and and I think that While it is a cost-saving certainly for a lot of restaurants to be able to do this, I am concerned that it drives more people away From wanting to go to a restaurant because it's just a real in on the ass To do it and to wait. And and you know, I love your observation that you feel a little lonely just sitting there with your number and nobody's paying attention to you. You know, I think he could. When we go to a restaurant, part of it is, you know, having a community, part of it's being seen, part of it's being, you know, part of this whole big thing in in a restaurant and if you're just sitting there with a little plastic number, it Takes away, takes away. So good point. So, um, he's food, not phones. I wanted, I want to talk about some statistics here. The average person spends 5.4 phones, 5.4 hours on their smartphone, every single day. This comes from eco htm, and 96% of Americans have at least one cell phone. 71% have admitted they sleep next to their phone. I don't sleep next to G, sleep next to your phone. Selling.

Sally:

I do, because I use it as my alarm, so I could get an alarm clock, I guess.

Phil:

Yeah, okay, that's a good point. I yeah, I've trouble sleeping, so I don't need an alarm clock, I'm just up all the time. Also, what they, what they cite, is Experts like Nielsen, smart insights, comm score and Pew Research Center that say that more than half of that time is spent on social media Over the course of a lifetime. I found this fascinating. You'll spend a year and seven months on Facebook, more than a year and ten months on YouTube. Snapchat takes up 14 months of your time, eight months on Instagram and 18 days on Twitter. Not sure why it's only 18 days of Twitter. Maybe that's since Elon Musk took it over. The average American spends upward for 55 minutes a day texting and the remainder of the time checking email, browsing the internet and using other apps. The average user, how many times would you say that you picked up your phone every day to look at it?

Sally:

Oh my goodness, um 20.

Phil:

Okay. So the average user picks up their phone 58 times a day. 58 times a day, that's two and a half times every hour, and 82% of people in the survey believe that they use their cell phones less than the national average. So we we really have a problem here, but we're glad a yogurt company who has always been cutting edge that's decided to. And there's my cell phone going off talking to you right now. I'm right now. There's a good company. We've always been ahead of the game as it relates to yogurt, icelandic yogurt, siggies. What is siggies doing?

Sally:

This is really cool and you know, phil, we're particularly excited about it because, you know, in last September hopefully people are starting to know about it we started a grassroots campaign called Food Not Bones, trying to get more and more people on board this idea that we need less screen time. And, once again, we need that human interaction, we need that community. We need that for our mental health right now and for our communities to thrive. So I love this. They're comparing it to dry January, which has become very popular, where people give up alcohol for a month to see how they feel what that does for them, and this is asking people to do a 30-day digital detox. Now they're gonna pick 10 winners and they're gonna give those winners $10,000. You also have an opportunity to win a smartphone lockbox so you can just lock that phone up so you can't get to it, a good old-fashioned flip phone, a one-month prepaid SIM card and three months worth of siggies yogurt. So they've got some really great prizes. That $10,000 would be amazing to win and you just have to put your phone down for a month so you can go to their website and I'll post in the comments the link for the contest so you can look at all of the rules. But yeah, this is a great way to spread the message here about that. We're spreading food, not phones, and let's just all start thinking about limiting our screen time a little bit more.

Phil:

Absolutely. And what I love about it and I hope they publish this part of submitting for the contest is you have to write an essay on why you need a digital detox in your life and how it will impact in a positive way. So I'm just hoping and we're gonna reach out to siggies to hopefully get some of those essays and we'll publish them on food, not phones as well. So great, great idea, siggies. I wish more companies would do it, more food companies getting behind it and, to your point, let's just relate to each other versus just technology. Thanks, ali, on the bullseye today, kim Severson, one of my favorite writers at the New York Times, has another notable column that's a must read for all of us in the food world. In the Ozympic age, has Cravable lost its selling power? Since Ozympic has come on the scene, many, including us, have written and talked about the implications, both the good and the bad, of this new drug. Severson's column adds a new dimension, though Cravable for food brands has long stood as a beacon for food developers to produce products with qualities that engender a desire, sometimes a very intense desire, for more. All too often these properties are sugar, salt and fat, and all too often they can become addictive and found front and center in ultra processed foods. Now, there's more to being Cravable than just those three properties that seem to come under attack. Creating Cravable foods is an art that involves a delicate balance of flavor, texture, aroma and visual appeal, along with the non to both the novelty and tradition, and a touch of emotional connection. Let's remember that food is not just sustenance. It's comfort, celebration and its tradition. Effective food brands should aim to create an emotional connection through their food offerings. The crux of crevability lies in the perfect balance of flavors sweet, salty, sour, bitter and umami. Each of these taste profiles play a vital role. Texture is often a second thought to flavor, but it's a critical component of food that's craved. The contrast between crunchy and creamy or the satisfying bite of a high-quality piece of dark chocolate can elevate a food from good to crave-worthy. Then there's the aroma. We've all walked into a bakery and sensed the desire for a piece of that warm, delicious, smelling crusty bread, or walking through the produce department, where the aroma of fresh citrus puts us, frankly, in a better mood. Severson begins her column with the memorable advertising from Frito Lay's award-winning and powerful TV ad, where actor Bert Lahr told up a single potato chip and challenged us by saying betcha can't eat just one. She goes on to cite other examples of craveable foods and how brands advertise them to lure consumers towards craving them. But the major focus of her column and what we need to pay attention to is posing the question to food marketers on how they will have to respond with new recipes, as drugs like ozempic and would gov change the way people consume our foods. Now these new drugs eliminate food cravings. They create a major challenge for food brands. Our friend Marion Nestle told her that these drugs aren't existential threat to the food industry and certainly an existential threat to the processed food industry. Other experts aren't as convinced as Nestle that these drugs are game-changing. I tend to agree with Marion and do believe that the food world is at a turning point, not just because of these drugs, but also because consumers are fed up with long lists of ingredients, preservatives and artificial anything in our foods. Yes, we're seeing more food brands investing in more celebrities and influencers than ever before on TV and, of course, on social media. And yes, during the pandemic, we saw all generations gravitate towards comfort and highly processed foods to make us feel good and better. But the pandemic is over and we're finally seeing increased awareness and interest in the foods that we eat. As food inflation has reached new heights, our shoppers paid more attention. We don't have to or want to lose cravability as an industry. We just must work a bit harder to make better for you foods non-ultra-processed foods, and seeking ingredients that are more sustainable, and then create more natural foods that are just as craveable as Burt Lahrs' Challenge. Thanks for joining us on Lempert Report LIVE and we'll be back and see you here same time next week.

Sally:

Be sure to visit SupermarketGuru. com for the latest marketing analysis issues and trends, and don't forget to join us back here next Tuesday at 2:30 pm Eastern for more.

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Counter Service's Impact on Restaurants
Maintaining Cravability in the Food Industry